Spatial Dependence of Time Preferences: Evidence from Field Experiments with Nigerian Farmers

Abstract

Individual time preferences may be shaped by environmental aspects which are clustered in space. Thus, time preferences could be spatially clustered too. We analyse the association between unobserved spatial heterogeneity in time preferences and intertemporal decisions taken by rice farmers in Ogun State Nigeria using data from a field experiment and a survey conducted during the cropping season. We used a Spatial Autoregressive (SAR) model with instrumental variables (IV) to estimate the association between farmers’ intertemporal decisions and unobserved spatial heterogeneity whilst controlling for institutional factors as well as farm and farmer-specific traits. We found evidence of spatial dependence in rice farmers’ time preferences suggesting most farmers exhibit similar inter-temporal behaviour as their neighbours. We found most farmers to be impatient. In addition, older rice farmers, Christians, married rice farmers and those residing in poor or bad road network areas show higher tendency for being impatient. We conclude that our findings have important implications for the dissemination of improved farm practices and technology innovation.

Keywords: decisions, impatience, location, rice farmers, spatial dependence, time preference